Tax credits, or lollipops?

Some three dozen tax credits are available to New York state taxpayers preparing their personal income taxes this year.

Some, like the earned income credit, mirror federal offerings. Others, like the historic homeownership rehabilitation credit, encourage community development. Others, like the clean heating fuel credit, subsidize desired behavior. And most, like the child and dependent care credit, the college tuition credit, and the Empire State child credit, make life a little more affordable for New York’s families.

But when you then look at the 400 bills mentioning “tax credit” pending in the state Legislature, it’s clear that “tax credit” has become state legislators’ version of a bank giveaway.

Among these pending bills are a credit of up to $250 per household for the purchase of new bicycles and a credit of up to $750 per household for the purchase of personal property to replace that damaged by bedbugs. Neither of these proposed laws speculates the total potential hit to the state’s revenue, but they clearly serve goals that can be fairly characterized as picayune.

Unlike a tax deduction, which is subtracted from the amount of income on which a person pays taxes, a tax credit is debited from the actual amount of taxes owed. So it has an outsized impact. Which raises a question: Shouldn’t any tax credit — something that directly impacts the state’s available revenue — have a broad reach?

Last week, Cardinal Timothy Dolan made his annual budget-season visit to Albany, touting the Education Investment Incentive Act, which would provide tax credits to individuals, corporations or partnerships that make donations to public, charter or religious schools. As the Times Union’s Casey Seiler reported this week, the proposal, which has knocked around the Legislature for years, would cost the state treasury $500 million a year. It was a late inclusion in the state Senate’s one-house budget resolution.

The state collected $40.2 billion in personal income taxes in 2012-13, but our educational institutions are struggling as they balance the need for increased resources to meet the Common Core Learning Standards against the fiscal limits set by the property tax cap.

This isn’t a time to be talking about giveaways that clearly will benefit the private education sector far more than our public schools.

In the Center on Budget Policy and Priorities report earlier this year analyzing states’ long-range planning, New York scored well, ranking sixth among the states, due partly to its multi-year revenue and spending forecasts and pension funding. But the state needs to improve its oversight of tax expenditures like these personal income tax credits. It ought to use a nonpartisan fiscal agency to score such bills as the bicycle or bedbug proposals.

It’s time to retire the tax-credit-cum-toaster strategy in favor of sound fiscal planning. We’ll get our lollipops in the bank drive-through, thanks.

7 Responses

This is exactly why we need to go to a simplified flat tax system. Eliminate the loopholes and kickbacks. Stop punishing the single person living a simple lifestyle. Make the tax rate fair and equal for all.

I guess the TU Editors really don’t like tax credits for private schools. This is their second opinion piece against it in as many weeks.
Well. 2 things come to mind.
The current NYS Child Tax Credit rewards having children. Not necessarily taking care of them. An Education Credit would reward caring for and investing in the kids’ future. That’s not a bad thing.
Next. The parents who would receive this credit would also continue paying public school taxes even though their kids wouldn’t be using or benefiting from public schools.
Public schools would not lose one cent of tax money if this credit were enacted.
The $500 lost from NYS tax collection could be made up by removing the Film Tax Credit given to movie producers. That credit is $420 million PER YEAR.
Movies? or Education.

“This isn’t a time to be talking about giveaways that clearly will benefit the private education sector far more than our public schools.” WRONG, this is exactly the time to make the taxpayer whole, those of us who know that the real problem with the government education system isn’t the lack of money but the over-compensation packages for the public school teachers and administrators. It’s absolutely ridiculous that a family that chooses to send their child/children to a private school be penalized for NOT consuming taxpayer resources, while at the same time are required to pay taxes to support something they don’t even utilize.
The rules for funding government schools have for too long been written with the special interest of teachers union members as the beneficiaries. The special interest rhetoric of “it’s for the children” is pathological deceit, committed by the greedy public school teacher unions.

Agree with the writer. However, anyone who uses this as an excuse for flat tax, as I see in some comments here, is using this to advocate for the most unfair, Libertarian (read Ron / Rand Paul) sponsored, tax system imaginable. Call it “fair tax”, “flat tax” what have you, it’s a disaster and I pray I never live long enough to see one enacted.

Denallen makes an excellent point in the logical fallacy of contending that the lost tax revenue would be deducted from public school funding. It is also relevant that parents who choose private shcools do in fact contribute to public shcools specifically by lowering the usage of those facilities.

When you write of tax credits “… most, like the child and dependent care credit, the college tuition credit, and the Empire State child credit, make life a little more affordable for New York’s families” it is difficult to reconcile that recognition with opposition to the EIIA.

Complaints now about greedy unions/teachers will morph into complaints about greedy profit making middlemen if the charter schools are allowed to continue to push public schools out.
I pity the ignorant parents that have been sold a bill of goods about this. Consider that charters can spend, spend, spend to promote their genius, but public schools cannot. They know they can win because advertising works.
That makes all New Yorkers big fat suckers.